Economic authorities conferred last night and this morning on means to prevent a rise in commodity prices in the wake of the devaluation of the Israeli pound yesterday. Price increases, especially in the food industry, are feared as a consequence of the higher price of imported goods. Israeli authorities were reliably reported to be considering a reduction of tariffs on certain imported raw materials to eliminate the basis for local price rises for finished products which could set off a new inflationary spiral.
Customs duties on other imports may be increased and, pending a decision, importers were ordered this morning to deposit an additional 15 percent of the value of their imports in the event that customs rates are raised.
Meanwhile, the Israel pound remained steady today in relation to most other foreign currencies. The official rate of U.S. dollars was IL 4.20, the same as it was before both currencies were devalued. No changes were registered in the rates of Italian lira, Swiss francs or pounds sterling. But other European currencies and the Japanese yen were dearer today in terms of the Israeli pound. There was little significant change in the free (black) market rate. The dollar was being traded between IL 4.40-4.60. The German mark was stronger and rose more steeply than the French franc.
FEAR HIKES ON IMPORTS
The Israeli-pound was devalued yesterday in order to maintain parity with the U.S. dollar which was devalued by ten percent Monday. Israeli monetary authorities said today that there was no intention to reduce the IL beyond the ten percent devaluation. But the price of goods imported from Europe and Japan has gone up and this was reflected in certain sectors of the market today.
Some merchants have cancelled their discounts for cash payments. A general price increase is feared on such imported items as cars, television and stereo sets which are in heavy demand. Finance Ministry officials estimated increases of 10-12 percent on goods imported from Europe and Japan. But construction industry sources said they didn’t anticipate a rise in the cost of flats beyond one percent at most.
A new round of price increases would almost certainly lead to new wage demands by Israeli workers at a time when most labor contracts are in the process of negotiation. Economic authorities said no rise in the price of wheat and other basic foods were expected unless the price rose at the source of supply.
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